How non-metro cities are becoming breeding grounds for startups

Great ideas are often born in smaller cities and towns. To survive, to attract talent and funds, the entrepreneurs travel with their fledgling businesses.Suman Layak | ET Bureau | Updated: August 08, 2016, 16:33 IST

The world of technology-based startups is unsurprisingly mobile, but in more ways than just being about the phone. People move, as do technology, company ownerships and then the companies themselves.

Great ideas are often born in smaller cities and towns. To survive, to attract talent and funds, the entrepreneurs travel with their fledgling businesses to the larger cities.

AskLaila, the internet-based listings operation, now based in Bengaluru, actually had roots in Jalandhar. Or, take Instamedia.com, which sold its properties to different companies in 2013 after scaling up — it had started up from Shimla.

The tide may well be turning. The founders of viral content platform WittyFeed moved their venture to Indore from Chennai.

Sometimes, entrepreneurs come back to their roots to startup, like Uma Bondada, founder of Vayavya Labs who moved back to Belagavi (formerly Belgaum) from the US.

Critical components of the ecosystem are waking up to the possibilities of non-metros. Singapore-based Govin Capital is looking at startups to fund in tier-2 cities for its accelerator; and TCS has set up an innovation centre in Nashik.

ET Magazine, along with research partners Tracxn and JLL, took a deep dive into the world of tech startups in smaller towns and cities in India. Our team of writers moved across the country, covering 16 cities, meeting entrepreneurs, understanding their problems and their aspirations for growth and the pros and cons of being in a smaller city. Funding is a worry.

A Mumbai-based venture capitalist let on that good ideas from smaller towns are put on the backburner as VCs worry whether smalltown entrepreneurs are smart and presentable enough for the next round.

Then there is Hitesh Dharamdasani, founder of a network security startup Informant Networks in Belagavi, who says, “I was very clear I didn’t want to take VC funds, having seen the effect in Silicon Valley.”

There is still some way to go for this tech-preneurship wave to spread across the country — especially the east. Kolkata, the metro from the east, lags at No. 11 (based on Tracxn data) when we rank cities by number of funded startups and drops to 22 when ranked by total funding.

Bhubaneswar comes up in discussions as a developing hotspot, but investors appear chary to back startups there; ditto for cities in eastern UP, Bihar, Jharkhand, Chhattisgarh, the newly minted Andhra Pradesh or the entire Northeast.

But there are gems hidden across the country — for instance, Modikhana.com, a grocery delivery company that has started in West Bengal’s Durgapur.